Health insurance in India has come a long way over the last two decades. In today’s world, health insurance does much more than just cover hospitalisation costs. There are many plans that provide modern treatments, offer cashless coverage at thousands of hospitals, let you purchase insurance online, and reward you for being healthy.
A lot of these changes have been driven by the Insurance Regulatory and Development Authority of India (IRDAI). Over the years, it has introduced rules that have made health insurance more transparent and consumer-friendly, including standardised products, easier policy portability, better coverage for pre-existing diseases, and faster claim settlement timelines.
What was health insurance in India like before?
Health insurance in India was much simpler than it is today. Most health policies were designed to cover hospitalisation expenses. Some of the common features of health insurance back then included:
Most health insurance policies focused mainly on the cost of hospitalisation, excluding other costs such as outpatient services and diagnostic tests.
Pre-existing diseases often came with longer waiting periods or stricter exclusions than they do today.
The claims process was manual, involving more paperwork and longer processing times.
Terms and exclusions across insurance companies varied widely, making it hard for people to compare health insurance policies.
Many people depended on employer-provided health insurance, which usually ended when they changed or left their job.
How has health insurance in India changed over the years?
Health insurance has come a long way. The modern health policy covers more, settles faster, and comes with various perks. Here's a look at some of the biggest changes.
Tax deduction under Section 80D
A health insurance policy doesn't just protect you during a medical emergency; it can also help you save on taxes. You can claim up to Rs 25,000 in a year for yourself, your spouse, and dependent children, and an extra Rs 25,000 for parents. If your parents are senior citizens, that second limit rises to Rs 50,000.
Wellness benefits
Insurers now reward you for staying healthy instead of only paying out when you fall sick. This could come in the form of free yearly health screenings, online doctor consultations, discounts on renewal premiums, or wellness points that can be redeemed for health-related services.
AYUSH cover
Treatments carried out through Ayurveda, Yoga, Unani, Siddha, and Homoeopathy are usually covered by several health insurance policies; hence, the cost of your hospitalisation would be claimed under AYUSH treatments in health insurance.
Moratorium period for claims
If you've renewed your policy continuously for the required number of years, your insurer generally can't reject a claim later because of an unintentional non-disclosure, except in cases of fraud.
Cover for pre-existing and modern treatments
Waiting periods for pre-existing conditions have been shortened, and insurers must now cover modern treatments such as robotic surgery, oral chemotherapy, and day-care procedures that older plans left out.
Pre-existing and new-age treatment coverage
The waiting period for pre-existing diseases has been significantly reduced. The insurance company is now obligated to provide treatment with modern medical procedures, such as robotic surgery, oral chemotherapy, and daycare procedures.
Faster claim settlement
Claims are approved faster, paperwork has been reduced, and now many insurance companies even allow you to submit claims digitally instead of visiting a branch.
How have health insurance claims and policy purchases become digital?
Buying and claiming health insurance has become much simpler than it used to be. Today, you can compare plans, buy a policy, and receive your policy documents online in just a few minutes. Insurers have enabled you to file and manage your claims online, making the process faster and easier with less paperwork.
In claims processing, a cashless claim at a network hospital results in the insurance company paying the hospital directly. You don’t have to pay first and then get reimbursement. Even if there is reimbursement, you can submit documents digitally. IRDAI has pushed insurers toward faster cashless authorisation and settlement, so approvals at the hospital desk occur in hours rather than days.
Read more about IRDAI's New Health Insurance Rules.
You don't lose the waiting period you've already served
The change in insurers does not necessarily mean you will have to restart the waiting period. If you have already completed part of the waiting period with your existing insurance company, that period will normally be transferred when you port your health insurance plan.
How do wellness benefits work in health insurance?
Today, most of the health insurance plans offer wellness benefits. You can earn discounts on your premiums, get your yearly check-ups done for free, and much more, based on your health insurance plan.
Let’s assume you pay Rs 12,000 annually in premiums, and that the plan you bought offers a 10% discount on your renewal premium if you meet the wellness goals set under the policy.
| Item | Amount |
|---|---|
| Base annual premium | Rs 12,000 |
| Renewal discount earned (10%) | Rs 1,200 |
| Premium payable after the discount | Rs 10,800 |
Key Takeaways
Health insurance in India has evolved from providing inpatient treatment coverage to broader plans that cover day care, pre-hospitalisation/post-hospitalisation, outpatient services, mental health, and even teleconsultation.
Portability allows a change of insurers at the time of renewal, with credits for the waiting periods served carried forward.
Mental illness is now covered on par with physical illness under IRDAI norms.
Rising medical costs, lifestyle diseases, regulation, technology and the COVID-19 pandemic are the main drivers of change.
Cashless treatment settles bills directly with network hospitals, and buying and claiming are largely digital.
Frequently asked questions
Tax benefits under Section 80D are still available; however, these days, it is purchased primarily to protect against high medical costs. It is the cover, cashless availability, and wellness aspect that make health insurance important.
No. Although all health insurance policies are designed to help cover medical expenses, there can be significant differences among plans offered by different insurance companies.
Yes, they are covered after a waiting period that IRDAI has standardised and capped. The waiting period varies by plan.
Modern health insurance policies usually include OPD cover, which covers all consultations and diagnostic tests without admission. Many health plans include teleconsultation as well.
About the authors
Neviya Laishram
Written by · Senior Editor – Health, Life and Group Health Insurance Content at ACKOWith a journalism background, she brings 9 years of experience in strategising and editing health, life, and group health insurance content. Having written for magazines and digital publications, she combines research and editorial expertise to create credible, useful content for readers.
Dr Nitin Kumar Gupta
Reviewed by · SVP – Health Underwriting & Claims at ACKO General InsuranceWith 20+ years of experience in digital transformation and growth, he is a leader specialising in health, life, accident, and disability insurance. Backed by an MBBS degree and insurance designations (FLMI, FALU, FLHC, ACS, ARA), he combines expertise with leadership.
